Socially Responsible Investing (SRI)

Conscience Driven Investing

Socially Responsible Investment (SRI) is an investment strategy that incorporates environmental, social and corporate governance (ESG) factors within the investment process.

Features & Benefits

With over 25 years of experience managing socially responsible portfolios and an ever increasing client base in diverse socially-screened strategies, Northern Trust offers a breadth of capabilities to build a complete portfolio solution incorporating environmental, social and governance (ESG) factors:

Multiple approaches to incorporating ESG factors into portfolios, such as negative and positive screens, shareholder advocacy, and best-of-sector stock selection.

Passive, active, and tax-efficient investment strategies to maximize investment and social return.

Exposure to global equity and fixed income asset classes and SRI-based universes, such as the Domini 400 Social Index.

Commingled funds and separate accounts for scale, efficiency and customization.

Social Investment Capabilities

We believe socially responsible investing (SRI) can be executed using a variety of approaches to incorporating ESG research within portfolios. Our relationships with leading ESG research providers, such as MSCI ESG, gives us the tools to develop an optimal strategy based on your requirements.

Negative ScreensNegative screens exclude companies with involvement in any of the following industries or activities that clients choose to restrict:

Abortion

Labor abuse

Adult entertainment

Military weapons

Alcohol

Nuclear Power

Animal testing

Poor diversity

Contraceptives

Pornography

Discrimination

Pork

Environmental destruction

Stem Cell

Firearms

Sudan

Gambling

Tobacco

Positive ScreensPositive screening includes companies with strong performance in any of the following ESG factors that clients choose to emphasize:

Board Diversity

Firm Diversity

Clean Energy

Human rights

Charitable Giving

Product Innovation

Community Relations

Product Quality

Corporate Governance

Product Safety

Employee Relations

Product Safety

Environmental Policy

Work/Life Benefits

Best-of-Sector Stock SelectionThis approach selects companies with the highest ESG record relative to sector peers. As a result, companies in industries traditionally screened out of SRI portfolios, such as oil and mining, are included in these portfolios. This reduces the sector-bias common in screened portfolios. Best-of-sector stock selection also creates an incentive for other companies within the industry to improve their social and environmental impacts.

Shareholder AdvocacyShareholder Advocacy describes investor efforts to submit and vote corporate proxy resolutions as a means of influencing company behavior. This strategy was successful in pressuring corporations to pull out of South Africa. It has also been instrumental in reporting minority hiring practices and improving environmental practices through adoption of the CERES principles (an environmental code of conduct).

The changing shape of ESG regulation is one of the main drivers of ESG growth. This paper looks at the affect of both mandatory and voluntary regulation on investor decisions and asks if these efforts encourage them to look at ESG, when otherwise they might not.

By incorporating a quality factor overlay into an ESG portfolio, investors are able to emphasize the long-run sustainability of ESG practices while increasing the likelihood of performance above the benchmark. Read our paper to discover more.

Investment products and services are offered through Northern Trust Securities, Inc., member FINRA and SIPC and a wholly owned subsidiary of Northern Trust Corporation. Any attached research reports containing the Northern Trust Logo or trademark were prepared solely by employees of Northern Trust Investments, Inc., an affiliate of Northern Trust Securities, Inc.

Northern Trust Corporation. Head Office: 50 South LaSalle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability in the U.S. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation. For more information, read our legal and regulatory information about individual market offices.